Former Jeweler Pleads Guilty to Money Laundering

October 6, 2014byRob Bates

Joseph Harold Gandy, 64, former owner of Denman-Crosby Jewelry Store in Mountain Brook, Ala., has agreed to plead guilty to a money-laundering charge after he tried to pawn jewels that he had previously reported as stolen in a robbery.

According to a statement from the FBI, following an armed robbery of his store in Dec. 2004, Gandy told insurers that $2.8 million in inventory had been stolen. He later received $2.6 million from his insurance company, the maximum allowed under his policy. According to reports, the heist forced the store into bankruptcy.

Nine years later, Gandy enlisted a friend to pawn one of the purportedly stolen stones at a local jeweler. The transaction was called off when the jeweler asked questions about its origin, and Gandy worried he would see its inscription.

Later that year, a friend of Gandy’s successfully pawned three stones on the stolen-inventory list—a 3.45 ct. cushion-cut diamond for $8,000; a 2.16 ct. round diamond for $2,000; and a 3.01 ct. emerald cut, in exchange for a $12,000 loan.

Gandy later made up a handwritten list of 32 stones he had for sale, according to the plea agreement; 18 of them matched stones he had reported stolen to the insurance company.

When federal agents searched his home, they found several other items once reported as stolen, including nine Rolex watches, the plea agreement says. The agreement says that Gandy falsely included at least $1.5 million in jewelry on the stolen-inventory list.

Gandy also pled guilty to being a felon in possession of firearms, after agents found 99 guns at his home, including two assault rifles. Gandy was convicted of mail fraud in 1989 and can no longer possess firearms. His counsel has suggested that most of the guns were either handed down from his father and his grandfather or belonged to his son, who died in 2004. The plea agreement says the government has no evidence that Gandy was violent.

The agreement is a binding one, in which both the government and Gandy stipulate that a 45-month prison sentence and $20,000 fine is appropriate.